Eamonn Ives is the Head of Energy and Environment at the Centre for Policy Studies.
As the dust settles on another conference season, an altogether more momentous gathering lies just around the corner. At the end of this month, the COP26 climate talks will get underway in Glasgow – where nations from across the world will convene in a bid to step up action on climate change.
The UK should go into COP26 as a confident host. Since 1990, it has virtually halved its emissions of greenhouse gases. But past performance does not predict future results – and the road ahead almost certainly won’t be quite as simple.
Britain’s decarbonisation success has been largely predicated upon doing the easy stuff first. Over half of all of the emissions reductions in the last 30 years have come purely through cleaning up our energy supply. By replacing coal-fired power stations with that from renewables and more gas, emissions from electricity generation have been slashed by almost two-thirds since 2010.
Where does that leave other parts of the economy? In a word, stagnant. For all the focus on electric vehicles and getting more people cycling, transport emissions have barely budged. Agriculture is as polluting as it was when Tony Blair left Downing Street. Emissions from residential properties are down over the long-run, but have been rising in recent years. Without making progress in decarbonising these sectors, Boris Johnson’s admirable rhetoric on climate change will be just that – rhetoric.
As we enter the next phase of decarbonisation it is incumbent on the Government to think carefully about how it can reliably cut emissions from bits of the economy which have hitherto proven stubborn to clean up.
From recently published strategies, we have seen how much of an active participant the Government wishes to be in this green transition. Taxpayers’ money is being thrown towards a smorgasbord of green industries. Industrial policy, if it ever went away, is firmly back on the table.
Of course, given the characteristics of climate change – “the greatest market failure the world has seen” – some degree of government involvement on the matter is both necessary and legitimate.
But there is more than one way to peel a potato. In its strange turn towards top-down, command-and-control environmental policies, the Government risks neglecting the power of markets, price signals, and supply-side reforms to hasten decarbonisation.
This is particularly confusing, given how successful broadly market-based solutions have been in even the recent past. The example of electricity, mentioned above, should be instructive. While many factors combined to clean up the grid, the introduction of a nascent carbon tax on emissions from power stations in 2013 was what drove coal to its near total demise.
Extending carbon pricing to more of the economy would serve as a constant pressure on emissions. It could be relied on to do a great deal of the heavy lifting on the way to Net Zero, in an efficient, business friendly manner. But it won’t be enough on its own – complementary policies will be needed. To speed up decarbonisation of the transport sector, the Treasury should get serious about road pricing. The need to do so will only become more imperative when motoring taxes begin to wither away as we switch to zero-emission vehicles.
To crack emissions from our food system, regulatory policy for novel products like cultured meat or genetically edited crops has to be fit for purpose. Entrepreneurs won’t bother with the R&D if they can’t be sure they can sell the fruits of their labours.
To stop wasting energy, planning policy should be liberalised so that newer, more efficient homes can be built – ideally at greater densities in order to promote more active travel and increase the viability of public transport. Ingenious ideas such as ‘street votes’ mean this can be done without compromising on greenfield land.
To cut the costs of the Net Zero transition for consumers and businesses, the government should – as I recommended in my report with the Centre for Policy Studies, Clean Free Trade – further liberalise tariffs and non-tariff barriers on imports of environmental goods and services. If it could encourage other nations to do similarly, it would be a win-win for economic welfare and environmental sustainability, and open up markets for green British firms.
When it comes to climate action, the Prime Minister talks a good game. But fine words mean nothing without robust policies behind them. As we look towards the coming decarbonisation dilemmas, a closer embrace of pro-market climate policies will be essential to cost-effectively rid emissions from all corners of the economy.